3/23/2010 @ 10:00AM

Housing Data Helps The Street

Wall Street extended its gains Tuesday morning on the heels of a rally Monday when the market reacted to a successful push by the House of Representatives to pass a contentious health care reform bill late Sunday.

The bill will give an additional 32 million Americans access to basic health insurance by 2019, and now goes to President Obama for his signature. Health care stocks set the pace for Monday’s gains, after legislators resolved one of the stock markets big uncertainties this year. Projected damage to insurers seemed mostly to have already priced into their shares. (See “Health Reform’s Winners And Losers.”)

A report on existing home sales showed sales of previously owned homes fell 0.6% in February to a seasonally adjusted annual rate of just over five million units. The housing market has lagged behind other industries as the economy slowly rebounds from a recession largely founded on its collapse.

Stocks started narrowly higher out of the gate early Tuesday before widening their advance. The Dow Jones industrial average gained 38 points to 10,824, the S&P 500 was up 1 point to 1,167 and the Nasdaq added 3 points to 2,398.

The ongoing scuffle between
Google
and the Chinese government over censorship saw further escalation Tuesday after the American search giant began redirecting its Google.cn searches to its service in Hong Kong. On Monday China’s state-controlled media accused Google of employing a political agenda when it threatened to exit the Chinese search market in January over the dispute. Shares of Google were off by 0.9% in early trading while American depositary receipts of Beijing-based rival
Baidu
, which have rallied recently, gained 1.6%. (See “Baidu Buyers Loving The Google Boost” and “ Filling Google’s China Hole.”)

In earnings news
KB Home
narrowed its quarterly loss to 71 cents per share and said new home orders increased 5% year-over-year, an encouraging sign of stability. Another bright point in the home builder’s report showed that the percentage of customers cancelling contracts fell to 22%, from a year-earlier 28%. The tepid improvement failed to meet analysts’ expectations, and KB shares slid 3.1% in early trading.

In the energy sector
Royal Dutch Shell
announced its second agreement in a week with China National Petroleum unit
PetroChina
to explore for natural gas in Sichuan under a 30-year contract. Falling gas prices have hurt Royal Dutch Shell, and it wants to boost production by 11% over the next two years. ADRs of Royal Dutch Shell fell 0.2% while those of PetroChina were down 0.7%. Crude oil contracts for April delivery were down 37 cents to $81.23 Tuesday morning.